**Scenario VIII**

**Trust Funds with Contract Authority**

**Part II:  Transfers of Contract Authority**

Scenario VIII illustrates accounting and reporting for the *transfer of contract authority* between two trust funds.  For a detailed description and background related to contract authority and the USSGL accounts involved, refer to contract authority scenarios posted on the USSGL Web site.

Trust funds with contract authority typically involve at least two reporting entities.  The first is the TAFS managed by Fiscal Service.  Fiscal Service is responsible for recording the collection and investment of receipts.  For example, the Fiscal Service -managed Highway Trust Fund collects earmarked taxes on gasoline and other fuels.  The second entity is the TAFS managed by the Federal program agency.  The agency TAFS is the account in which contract authority is granted and program activities are managed.  For example, the Federal Highway Administration of the U.S. Department of Transportation manages the Liquidation of Contract Authorization trust fund, and is responsible for recording the contract authority, recording the appropriations to liquidate contract authority, as well as tracking obligations and disbursements of the fund*.*Note that while the appropriation to liquidate contract authority is granted in appropriation acts, the funds will not be transferred via SF 1151 until actually needed for disbursement*.* This is for cash management purposes so that the interest earned in the Fiscal Service TAFS is maximized.  That concept is illustrated in Scenario VII, Trust Funds with Contract Authority, Part I: Appropriations to Liquidate Contract Authority – Funded by Nonexpenditure Transfers, and involves established USSGL account 4136 Contract Authority to be Liquidated by Trust Funds.

In some instances, however, the agency entity (referred to in this scenario as the parent account) is also granted the authority to *transfer contract authority* to recipient TAFS (referred to as the recipient account).  This is usually in the form of allocation transfers, but may also be an appropriation/balance transfer.  *At the time that the contract authority transfers, however, the funds will not be transferred until actually needed for disbursement.*  Again, this is in order to maintain sound cash management principles.  For this reason, and in order to support specific P&F lines, USSGL account 4137 Transfers of Contract Authority was established, and is the basis of this scenario.

**Year 1**

**Parent Account (69X8000)Recipient Account (14-69X8000)**

**Year 1**

**Parent Account (69X8000)Recipient Account (14-69X8000)**

**Year 1**

**Parent Account (69X8000)Recipient Account (14-69X8000)**

**Year 1**

**Parent Account (69X8000)Recipient Account (14-69X8000)**

**Year 1**

**Parent Account (69X8000)Recipient Account (14-69X8000)**

***Budgetary***

**Pre-Closing Trial Balance (FACTS II ATB):**

**Closing Entries**

***Budgetary***

**Pre-Closing Trial Balance (FACTS II ATB):**

**Closing Entries:**

**Year 1**

**Parent Account (69X8000)**

**Post-Closing Trial Balance:**

**Recipient Account (14-69X8000)**

**Post-Closing Trial Balance:**

**Year 1**

**Parent Account (69X8000)**

***Proprietary***

**Pre-Closing Trial Balance (FACTS I):**

**Closing Entry:**

**Post-Closing Trial Balance:**

**Recipient Account (14-69X8000)**

***Proprietary***

**Pre-Closing Trial Balance (FACTS I):**

**Closing Entry:**

**Post-Closing Trial Balance:**

**Year 1**

**Parent Account (69X8000)**

**Recipient Account (14-69X8000)**

**Year 1**

**Parent Account (69X8000)**

**Recipient Account (14-69X8000)**

**Year 1Program and Financing Schedule (P & F)  (Parent/Recipient Accounts Consolidated)**

**Year 1OMB Form and Content Statements (Parent/Recipient Accounts Consolidated)**

**Year 1OMB Form and Content Statements (Parent/Recipient Accounts Consolidated)**

# (continued)

**Year 2Parent Account (69X8000)Recipient Account (14-69X8000)**

**Year 2Parent Account (69X8000)Recipient Account (14-69X8000)**

**Year 2**

**Parent Account (69X8000)Recipient Account (14-69X8000)**

**Year 2**

**Parent Account (69X8000)**

***Budgetary***

**Pre-Closing Trial Balance (FACTS II ATB):**

**Closing Entries:**

**Recipient Account (14-69X8000)**

***Budgetary***

**Pre-Closing Trial Balance (FACTS II ATB):**

**Closing Entries:**

**Year 2**

**Parent Account (69X8000)**

**Post-Closing Trial Balance:**

**Recipient Account (14-69X8000)**

**Post-Closing Trial Balance:**

**Year 2**

**Parent Account (69X8000)**

***Proprietary***

**Pre-Closing Trial Balance (FACTS I):**

**Closing Entry:**

N/A

**Post-Closing Trial Balance:**

**Recipient Account (14-69X8000)**

***Proprietary***

**Pre-Closing Trial Balance (FACTS I):**

**Closing Entry:**

**Post-Closing Trial Balance:**

**Year 2**

**Parent Account (69X8000)**

**Recipient Account (14-69X8000)**

**Year 2**

**Parent Account (69X8000)**

**Recipient Account (14-69X8000)**

**Year 2Program and Financing Schedule (P & F)  (Parent/Recipient Accounts Consolidated)**

**Year 2OMB Form and Content Statements (Parent/Recipient Accounts Consolidated)**

**Year 2OMB Form and Content Statements (Parent/Recipient Accounts Consolidated)**

# (continued)

PAGE  

VIII - 1

Revised January 2003 ~~June 2001~~